Media attention and public awareness programmes have escalated the number of complaints to the office of the Pension Funds Adjudicator by 58 percent to 4 901 for the last financial year as opposed to 2 387 in the previous year.
While the figures testify to an increased public awareness of the functions of the adjudicator's office, the complaints have resulted in a backlog of more than 3 000 cases as at September.
In his foreword to the adjudicator's annual report, Pension Funds Adjudicator Vuyani Ngalwana notes that he has asked to be released from his contract when it expires in March, citing "impossible circumstances" due to a lack of sufficient staff.
Even-handed
In the adjudicator's annual report, Ngalwana points out that although the media has been quick to label his office a "consumer's champion", the statistics over the year show 68 percent of his rulings were made against the consumer.
Looking at complaints involving retirement annuity (RA) funds, the adjudicator's officer found in favour of underwriters and RA funds in 50 percent of the cases, he says.
A total of 3 101 complaints were resolved during the year and while complainants were granted relief in 31.5 percent of the merit cases, 68.5 percent were dismissed.
Most of the merit complaints, 46.7 percent, related to withdrawal benefits, followed by death benefits at 21.7 percent. Retirement and disability benefit cases accounted for 13.6 percent and 5.4 percent of complaints respectively.
Half of the complaints received related to matters outside the jurisdiction of the adjudicator's office.
These complaints included matters relating to Bargaining Council Funds, liquidations of funds, endowment policies, state funds, life policies, tax, trust companies and annuities purchased by pensioners in their own names through insurers.
Common complaints
One of the most common RA issues that came before the adjudicator arose from members stopping the premiums for their funds before their chosen retirement age.
The adjudicator's office found that insurers not only commonly imposed a penalty on members who did so, but also deducted all their expenses from the member's savings. This usually resulted in members not receiving any benefits because the "paid-up value" on the annuity was less than the insurer's expenses.
However, in all his rulings on this issue, Ngalwana found that the insurer could not impose such a penalty because the policy provisions did not authorise these deductions.
Statement of intent
Last December, Finance Minister Trevor Manuel and the Life Offices' Association signed the Statement of Intent which committed life insurance companies to certain minimum standards and values when imposing penalties on members of RA funds and on endowment policyholders.
The life assurers agreed to start implementing these minimum values from this month.
Ngalwana found life insurance companies were treating minimum values as a ceiling above which the companies were not prepared to venture.
"This is clearly not what the Statement of Intent envisages ... and leaves underwritten RA fund members no better off than they were before the Statement of Intent was signed," he says.